Guest Post: Why Is Gasoline Consumption Tanking?

Tyler Durden's picture

 Submitted by Charles Hugh Smith from Of Two Minds

Why Is Gasoline Consumption Tanking?

Gasoline deliveries reflect recession and growth. The recent drop in retail gasoline deliveries is signalling a sharp contraction ahead.

Mish recently posted some intriguing charts depicting a significant decline in gasoline consumption. Then correspondent Joe R. forwarded me this stunning chart of gasoline retail deliveries, from the U.S. Energy Information Administration: (EIA)


As Joe noted, this data is interesting because it is un-manipulated, that is, it is not "seasonally adjusted" or run through some black-box modifications like so much other government data.

Retail gasoline deliveries, already well below 1980 levels, have absolutely fallen off a cliff. Is the plunge inventory-related, i.e. are storage facilities so full that retailers are simply putting off deliveries?

Though I don't have data on hand to support this, I know from one of my correspondents who is in the gasoline distribution/delivery business that gasoline is very much a "just in time" commodity: gas stations are often close to running out of fuel when they get a delivery. Stations aren't holding huge quantities of surplus gasoline; that's not how the business works.

Given the absence of "extra storage" in gas stations (and the fact that the number of gas stations has fallen dramatically since 1980), it is reasonable to conclude that retail delivery is largely a function of demand, i.e. gasoline consumption.

Even if you dismiss the recent plunge as an outlier, the declines in retail gasoline deliveries are mind-boggling. If you look at the data from 1983 to 2011 on the link above, you will note that delivery declines align with recessions.

For example, deliveries jumped from 50.1 million gallons per day (MGD) in November 1983, when the nation was emerging from the deepest postwar recession then on record, to 58 MGD the following November (1984).

Deliveries steadily rose to a peak of 67.1 MGD in July 1998, declined marginally in the 2001-2 recession and then surged to 66.8 MGD in August 2003. If we just look at one month--say November--then we see that deliveries remained in a remarkably consistent channel from 1994 to 2008, between 54 MGD and 63 MGD, with the higher numbers occuring in the "peak bubble years" of 1998 and 2003.

In 2010, gasoline deliveries declined to the low 40s--literally falling off the charts. In November 1983, deliveries were 51.1 MGD; in November 2010, they were 42.8 MGD, and in November 2011 they were 30.9 MGD.

Does this reflect higher fuel efficiencies in the U.S. vehicle fleet? To examine fuel efficiency and other macro-trends, I assembled some charts of fuel efficiency (courtesy of the Early Warning blog) and a graph of employment, a commonly used proxy for economic activity/growth.

Let's start with some basic data about population and vehicles. There are 254 million passenger vehicles registered in the U.S. Some percentage of these are classic cars and other vehicles that aren't driven much, but nonetheless the number of vehicles that are in regular use is large.

U.S. population in 1983 was approximately 234 million. The U.S. Census Bureau estimates the current population at 313 million.

Vehicle sales declined from a record 17.4 million in 2000 to 11.5 million in 2010.

People are driving less: The Road... Less Traveled: An Analysis of Vehicle Miles Traveled Trends in the U.S.. (2008)

Driving, as measured by national Vehicle Miles Traveled (VMT), began to plateau as far back as 2004 and dropped in 2007 for the first time since 1980. Per capita driving followed a similar pattern, with flat-lining growth after 2000 and falling rates since 2005. These recent declines in driving predated the steady hikes in gas prices during 2007 and 2008. Moreover, the recent drops in VMT (90 billion miles) and VMT per capita (388 miles) are the largest annualized drops since World War II.

Here are two charts of U.S. employment which show two periods of strong expansion: in the late 1990s and in 2002-08.



If the number of jobs were correlated to gasoline deliveries, then we would expect deliveries to be close to those registered in 2003 and 1999, since the number of jobs has declined to the levels of those years.

Instead, we find deliveries are dramatically lower:
November 1999: 59 MGD
November 2003: 63.8 MGD
November 2010: 42.8 MGD

Once again, this is not an outlier: deliveries for all of 2010 were between 42 and 46 MGD, compared to deliveries in the high 50s/mid 60s in 1999 and 2003.

There are all kinds of other things that influence the number of miles driven, but there is little evidence that any one factor can account for a 47% drop in retail gasoline deliveries. For example, it is well-known that the U.S. economy has shifted to a digital, service economy in the past 30 years, and since more people can "consume" (via shopping at, etc.) and "produce" (work from home) without driving, then it makes sense that people are driving less.

But if we examine the data, it's difficult to attribute the massive recent drops to people ordering stuff online or working from home more. After all, people were working from home and ordering stuff online in 2003, when gas deliveries reached 63 MGD, and in November 2006, when deliveries were 58.8 MGD.

Deliveries in November 2011 were 30.9 MGD, a staggering 47% decline.

What about fuel efficiency? here are two charts from the Early Warning blog. They show a significant increase in the 1980s, but only modest improvement through the 1990s and 2000s.

If we use the same year as in the employment analysis, 1999, we see there was a 6% rise in efficiency from 1999 to 2010. This would suggest 6% of the decline in gasoline deliveries can be attributed to increased efficiency. But what about the other 40% of the decline? That cannot be attributed to higher efficiency.


I've marked up the first chart to show the secular trends in efficiency and employment.

There are no data-supported broad-based drivers for dramatically lower gasoline consumption other than austerity and lower economic activity. The code-word for "austerity and lower economic activity" that is verboten in the Mainstream Media is "recession." Indeed, if you examine the EIA data, the only causal factor that has backing in the data is recession--or if you prefer, austerity and lower economic activity.

Then there is the price of fuel. People have to go to work, pick up the kids, get their meds, etc., and few urban centers in the U.S. have mass transit systems that are up to the task of replacing autos. So most Americans have what we might call non-discretionary driving. But as the price of fuel rises, people find ways to lower their discretionary driving by combining trips, shopping less often, shortening or eliminating vacations, etc. Enterprises reduce costly business travel with teleconferences and other digital technologies.

Data supports the notion that high oil prices lead to recession. For example, Chris Martenson recently made a compelling case for this in Why Our Currency Will Fail ("Note that all of the six prior recessions were preceded by a spike in oil prices.")

Household income doesn't rise just because oil is climbing in cost, and so the extra money spent on fuel is diverted from other consumption or saving (capital accumulation). Higher fuel costs lower household capital formation and reduce consumption/economic activity.

Oil has been elevated for months, kissing $100 and rarely dipping below $90/barrel. Do higher oil costs explain the decline in gasoline consumption? Once again, they undoubtedly influence consumption, but that cannot explain the 40% drop in consumption. After all, when oil spiked in 2008 to $140/barrel, deliveries only dropped by a few million gallons: from 58.8 MGD in July 2007, before the spike, to 54.8 MGD at the point of maximum pain in July 2008.

The cost of oil has declined sharply from mid-2008, yet consumption has tanked from 54.8 MGD in July 2008 to 42.4 MGD in July 2011. That's a hefty 21% decline.

What other plausible explanation is there for the decline from 42.4 MGD in July 2011 to 30.9 MGD in November 2011 other than a dramatic decline in discretionary driving? That 27% drop in a few months in unprecedented, except in times of war or sharp economic contraction, i.e. recession.

If we stipulate that vehicles and fuel consumption are essential proxies for the U.S. economy, then we can expect a steep decline in economic activity to register in other metrics within the next few months.

Such a sharp drop would of course be "unexpected" given the positive employment data of the past few months. But as the data above shows, employment isn't tightly correlated to gasoline consumption: gasoline consumption reflects recession and growth.

In other words, look out below.

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Badabing's picture

Ahhh    Ahhhh    Ahhhhhh  BUSTOFF! Fake numbers give me a chubber!

Thorlyx's picture

Who cares. You can't drink gasoline, or diesel for that matter...

Born Patriot's picture

This is a perfect example of what happens after decades of multiculturalism. The unsustainable mix of different cultures in America is taking its toll on our economy. Bring back freedom of association!!! Ron Paul 2012!!

JPM Hater001's picture

Please dont sully the good name of Dr. Ron Paul with that rhetoric.  It is irresponsible and most definitely not what he would say on the matter.

SWRichmond's picture

Yeah the discredit effort is in full swing.

TruthInSunshine's picture

It's correlated with the falling labor participation rate, economic malaise (some would use a much stronger description), and the develeraging consumers, even those with jobs (who are preparing for the worst).

The Bernank has broken clarity, markets and confidence.

I was shocked to see NBC World News with Brian Williams do a lead story last night where they highlighted the deficiencies in the Fraudclosure Settlement, and used the case of a man who lost his home via falsified documents being signed, who spoke of a proposed $2,000 payment as a token insult. They then went on to interview the woman from Naked Capitalism who did an excellent synopsis of the breakdown of the fraudulent settlement and its consequences and its implications.

Sheeple are waking up.

ONO47's picture

I guess the Department of Fatherland ,I mean, Homeland Security will label Brian Williams and NBC a domestic terrorists. The man and the woman will detained at Guantanamo indefinitely.


trav7777's picture

oil production is down; the US has taken this one for the team.

Gas prices from $3.25-$4/gal will decrease consumption.  The prevalence of stupid SUVs is also declining.

Jendrzejczyk's picture

Born Patriot is yet another obvious, lame ass psychological experiment.

And just for you Trav- (I am a Silver Bag-holder Extraordinaire)

TruthInSunshine's picture

OT, but some really great news (/sarc) on MF Global (aka JonCorzineSlushFund):


February 10, 2012, 4:36 pm


8:01 p.m. | Updated

MF Global commodity customers whose cash vanished when the firm collapsed last year are owed $1.6 billion — up significantly from previous estimates — the trustee tasked with recovering the money said on Friday.

The revised figure reflects growing concerns that the trustee will not be able to claw back $700 million in customer money trapped overseas. Until now, the trustee did not include the $700 million when projecting the shortfall, hoping to avoid a battle with MF Global’s British arm, which is holding the customer money.


MF Global Trustee Sees $1.6 Billion Customer Shortfall

Harlequin001's picture

And for those amongst us that think possession of precious metals and hand guns will save you, read on...

Good luck with spending it, you're going to need your gun...

TheSilverJournal's picture

Less gasoline is being consumed in this country  because thise county is becoming poor. Not that hard to understand.

Harlequin001's picture

Well that's the thing about gold isn't it. When it's in a vault you can't show it off...

or pay taxes on it, especially if it's in a vault overseas...

Of course, you could always take out your hand gun and shoot the tax man and see just how far that gets you. That's one for you gun buffs by that way, those who think owning a gun will do you any good whatsoever...

good luck with that one.

Shocker's picture


Less Employment = Less Gas Consumption. People are driving to work less and less. Also unemployed they might of comepletely stopped driving.

On average a person has a 15 min drive to work each way , Now times that by the number no longer doing that drive and thats alot of gas not used.

Harlequin001's picture

They can all be gainfully employed in the Army, but hopefully on someone else's soil...

and then consumption will be back. No worries...

Oleander's picture

Yesterday I took the MBTA commuter train to Boston.  The lots nearest to the track always fill up earlyin the  AM and  later commuters walk farther to the train.

I was shocked yesterday to see parking spaces at 9 am in the closest lot.  Where are the commuters who ALWAYS took these spots? While waiting for the train I met others going to the Museum of science and a few heading to the airport.  More tourists than suits headed into Boston. Seemed very strange to me.

Harlequin001's picture

yes, the tourists will soon be gone...

goldfish1's picture

What other plausible explanation is there for the decline from 42.4 MGD in July 2011 to 30.9 MGD in November 2011

Retreat from war?

Xkwisetly Paneful's picture

Funny how the number is gospel like because it supports the mantra of the herd even though it is very suspicious.

The largest user of gas in the US by leaps and bounds is the government so although the posts are endless citing unemployment in the private sector there is no way such a precipitous drop is taking place without the largest single consumer consuming significantly less.


Rubbish's picture

The article is rubbish, it doesn't take into account the increase in IMPORTS of refined fuel. We are using less but not as much as this shows. The west is in full import mode now. Refiners make more money exporting refined fuels than selling them here.

Don Keot's picture

True, it is being touted that we are now a net exporter of oil.  WTF?

Rubbish's picture

I used to rely heavily on this exact same report years ago to get a true feel for our economy in the US. Then one day I actually had to go explore why the numbers kept decreasing in deliverys. I won't blame the author just advise him to do more research.

Cloud9.5's picture


We are being out bid for the finished product.

rustymason's picture

"Homeland Security will label Brian Williams and NBC a domestic terrorists. The man and the woman will detained at Guantanamo indefinitely."

Thanks for the hopeful vision. Perhaps DHS can play a useful role in the war on America after all. 

rustymason's picture

"Homeland Security will label Brian Williams and NBC a domestic terrorists. The man and the woman will detained at Guantanamo indefinitely."

Thanks for the hopeful vision. Perhaps DHS can play a useful role in the war on America after all. 

Sam Clemons's picture

The important thing is that people don't willingly shut up despite their passing of these fear-mongering laws.  Once they do, it will become more and more taboo to speak out against the political class.

A truly confident people would not need preemptive laws or wars to protect themselves.

Michael's picture

The country lost 1.2 million paychecks in January. Unemployed people don't buy much gas to get to work and go shopping with.

CrashisOptimistic's picture

That's a big part of it.

The other big part is the household consolidation.  Trips to the grocery store are once per household per week or month.  With the kids moved in, there are fewer households.

Cistercian's picture

Another big part of it is people like me.I drive a 95 honda civic which easily nets 42mpg average.I bought it 7 years ago and really enjoy sticking it to the man by needing less fuel.I also help all my friends properly select and tune their vehicles for maximum fuel efficiency.

Compare 40mpg to something like a Hemi Dodge Durango....which uses more than 4 times as much fuel per mile.

Also people don't have to drive to jobs they no longer have.

The oil companies are raping us.Let's all do our part to stick it right back to them.

trav7777's picture

the oil companies are raping you by providing you an indispensable product that they have to go dig up from insanely hostile environments and truck to your local corner while never spilling a drop or else you bitch?

Cistercian's picture

You are a shill and a dolt.How much does our oil cost when you figure in the use of the military to steal it?Please also calculate the cost of installing the Shah and the blowback from that.

 The majors are heavily subsidized criminal organizations...and they are EVIL.

 Oil is a needed product....imagine what it would be like if it's production and distribution was not controlled by people with less scruples than a congressman.The mind boggles.


John Skookum's picture

imagine what it would be like if it's production and distribution was not controlled by people with less scruples than a congressman.


Like who, exactly?

Mr Lennon Hendrix's picture

This is like how advertsising makes cars twice as expensive.  Either way, the downside of production is going to be heavy on the pocketbook.

Cistercian's picture

Don't be obtuse.Any ETHICAL human being would do, as opposed to the run of the mill criminal or super-villain.

Enzo's picture

Could you be more specific about the subsidies? I would be curious if they got any more subsidies than any other mining operation?? I believe that what you consider to be subsidies are in fact the application of generally accepted principles. Exxon alone paid $87 billion in taxes and duties in 2010 alone and had an 8% margin - substantially less than Apple. The "green" energy sector gets billions more in true ( non GAAP) subsidies. Maybe ALL government subsidies should be abolished. We'll save proven vs. probable oil and gas reserves for another day...

DaveyJones's picture

true, imperialism IS a "generally accepted principle" ...just not by those on the receiving end

Enzo's picture

Sorry, meant to say Generally Accepted Accounting Principles (GAAP). imperialism is a different discussion...

disabledvet's picture

EXACTLY! so "stick it to the man" by buying a Dodge Viper and "setting a new cross country speed record on I-80."

francis_sawyer's picture

Oil is a needed product....imagine what it would be like if it's production and distribution was not controlled by people with less scruples than a congressman.The mind boggles


Reminds me of that scene in the movie "Dr. Zhivago" where all the peasant Bolsheviks were celebrating because news had come in that they'd ousted the Tzar... One guys says "Who's the new Tsar"? & another one answers "There is no more Tsar... It's a government for the workers run by workers"...

I guess it was fun while it lasted... (you could probably talk to Robespierre after the Bastille and find a similar story)

Christophe2's picture

Just because past revolutions have been engineered by Zionist/masonic agents, this doesn't mean it has to be that way.  Furthermore, do not underestimate the difference the internet makes - control of information no longer exists as it did back then, and furthermore the tricks these pukes use have mostly all been exposed, making it easier to detect them when they repeat themselves.


The French revolution, as we know it, is the story told by the winners (the banksters) about their pawns (although Napoleon did end up rebelling!  WOOOT).  It is a joke, about as true and accurate a story as the holocaust.  Similarly, the truth of the Russian revolution is that it was basically an attack by foreign destabilizing agents.

=> they were not 'true' revolutions!


More to the point: once you realize you are a slave in a brutal, satanic system, how can you ignore it?  Do you really think that the status quo is livable or desirable?  Perhaps I am too proud, but I would rather die than be someone's SM bitch.  Furthermore, if I had kids, I would do everything to make a decent future for them.


Best of all: the internet really changes things.  'They' can't control information and opinion like they used to, they have lost control of the minds of men, and they are FUCKED.

=> there is a HUGE difference between an unexpected rebellion *against* TPTB and fake rebellions architected *by* TPTB, like the ones we've seen in the Middle East and Eastern Europe...

francis_sawyer's picture

All fucking stories are told by the winners... So what's so new about that?

Congrats... You won't be someones SM bitch...

But when the 'revolution' (at least the type you describe) happens... there will be no flippin internet if it goes that far... Unless you think that the command & control center of the revolution is going to be from mama's basement...

"Get busy livin'... or get busy dyin"... & if one is impatient enough, why not start today?

disabledvet's picture

and there i was thinking i was "sticking it to the man" doing 180 in a Pontiac GTO i'd just stolen off the dealer lot. I guess i gotta lot to learn about life...

Cistercian's picture

You have balls of steel..and yes, you are sticking it to the man.

  Fastest I ever went was only 154 on a 900 ninja in heavy traffic....EPIC.Pretty tame by todays standards I guess.

Don Keot's picture

We live 26 miles in the mountains and now we do everything required in one trip per week and I also bought a Geo.

Oleander's picture

I just got tired of driving to the store for groceries. I have begun using the delivery service of the local dairy. They carry more than just milk so I will be driving less and consuming much less. No more point of sale business from me.

spiral galaxy's picture

It's also correlated with auto aftermarket stats...........with which I'm responsible.  We saw a drop that was on par with the first quarter 2009 when the recession began!!!!!!!!!  Bottom line, very real and we are being lied to.  Like, so what else is new?

SystemsGuy's picture

I'm a consultant who does a fair amount of tech work for larger clients - hotel chains, government agencies, book publishers, etc. Through much of last year, business was pretty good - on par with 2008, before the credit markets took a hit. In the last couple of months, however, work has definitely slowed down - fewer leads developing for smaller dollar amounts. Since a lot of what I do tends to be early in a software product life-cycle, it means that I usually also see business declines before others in the tech industry. Definitely getting nervous.